Underwriting Essentials C120
Underwriter:1 - CORRECT ANSWER-An insurance professional employed to
accept or reject risk on behalf of an insurer
Underwriter:2 - CORRECT ANSWER-An investor of shareholders capital
Underwriter:3 - CORRECT ANSWER-An insurance professional employed to
implement an insurer's strategic plan
Underwriter - CORRECT ANSWER-An insurance professional who invests the
capital of an insurer's shareholders by accepting or rejecting risk to implement an
insurer's strategic plan
Insurance - CORRECT ANSWER-The undertaking by one person to indemnify
another person against loss or liability for loss in respect of a certain risk or peril
to which the object of the insurance may be exposed, or to pay a sum of money
or other thing of value upon the happening of a certain event
Facultative Reinsurance - CORRECT ANSWER-Negotiated between an insurer
and a reinsurer on an individual risk or policy
Treaty Reinsurance - CORRECT ANSWER-Is an agreement between insurer
and reinsurer to reinsure a block or portfolio of business without the insurer's
having to submit each risk to the insurer
Speculative Risk - CORRECT ANSWER-Where there is a change of either gain
or loss. Classic example includes gambling
Pure Risk - CORRECT ANSWER-Where there is only a chance of loss
Pure Premium - CORRECT ANSWER-The premium required to pay for insured
losses - claims
, Development Factors - CORRECT ANSWER-Adjustments to current reserves for
claims that have yet to be settled to reflect the estimated final cost of those
claims
Trend Factor - CORRECT ANSWER-Adjustments applied to all losses to reflect
what they would probably cost if they were to occur next year rather than having
occurred at some time in the past
Acquisition Costs - CORRECT ANSWER-Costs incurred by the insurer to
conclude a contract of insurance with a policyholder. May also include
commission to the broker, advertising, promotional, inspections, or appraisal fees
Administrative Expenses - CORRECT ANSWER-General expenses the insurer
incurs to operate business. Includes rent, explore salaries etc.
Profit - CORRECT ANSWER-The amount of money left to the insurer after it has
paid all its expenses
Underwriting Profit (or losses) - CORRECT ANSWER-Arises out of insurance
operations. It is the amount by which earned premiums exceed(or fall short of)
the cost of incurred claims and expenses.
Investment Income - CORRECT ANSWER-Income the insurer earns from
investing money that the insurer has received as premium but not yet earned, as
well as money it has set aside as a reserve to pay claims
Actuary - CORRECT ANSWER-A professional skilled in the application of
mathematics of financial problems. They apply specialized knowledge of the
mathematics of finance, statistics, and risk theory faced by insurance companies,
pension plans, government regulators, social programs and individuals.
Rate - CORRECT ANSWER-The price of a unit of insurance for the policy period
Premium - CORRECT ANSWER-The total cost of insurance, derived by
multiplying the rate of insurance by the amount of insurance.
Underwriter:1 - CORRECT ANSWER-An insurance professional employed to
accept or reject risk on behalf of an insurer
Underwriter:2 - CORRECT ANSWER-An investor of shareholders capital
Underwriter:3 - CORRECT ANSWER-An insurance professional employed to
implement an insurer's strategic plan
Underwriter - CORRECT ANSWER-An insurance professional who invests the
capital of an insurer's shareholders by accepting or rejecting risk to implement an
insurer's strategic plan
Insurance - CORRECT ANSWER-The undertaking by one person to indemnify
another person against loss or liability for loss in respect of a certain risk or peril
to which the object of the insurance may be exposed, or to pay a sum of money
or other thing of value upon the happening of a certain event
Facultative Reinsurance - CORRECT ANSWER-Negotiated between an insurer
and a reinsurer on an individual risk or policy
Treaty Reinsurance - CORRECT ANSWER-Is an agreement between insurer
and reinsurer to reinsure a block or portfolio of business without the insurer's
having to submit each risk to the insurer
Speculative Risk - CORRECT ANSWER-Where there is a change of either gain
or loss. Classic example includes gambling
Pure Risk - CORRECT ANSWER-Where there is only a chance of loss
Pure Premium - CORRECT ANSWER-The premium required to pay for insured
losses - claims
, Development Factors - CORRECT ANSWER-Adjustments to current reserves for
claims that have yet to be settled to reflect the estimated final cost of those
claims
Trend Factor - CORRECT ANSWER-Adjustments applied to all losses to reflect
what they would probably cost if they were to occur next year rather than having
occurred at some time in the past
Acquisition Costs - CORRECT ANSWER-Costs incurred by the insurer to
conclude a contract of insurance with a policyholder. May also include
commission to the broker, advertising, promotional, inspections, or appraisal fees
Administrative Expenses - CORRECT ANSWER-General expenses the insurer
incurs to operate business. Includes rent, explore salaries etc.
Profit - CORRECT ANSWER-The amount of money left to the insurer after it has
paid all its expenses
Underwriting Profit (or losses) - CORRECT ANSWER-Arises out of insurance
operations. It is the amount by which earned premiums exceed(or fall short of)
the cost of incurred claims and expenses.
Investment Income - CORRECT ANSWER-Income the insurer earns from
investing money that the insurer has received as premium but not yet earned, as
well as money it has set aside as a reserve to pay claims
Actuary - CORRECT ANSWER-A professional skilled in the application of
mathematics of financial problems. They apply specialized knowledge of the
mathematics of finance, statistics, and risk theory faced by insurance companies,
pension plans, government regulators, social programs and individuals.
Rate - CORRECT ANSWER-The price of a unit of insurance for the policy period
Premium - CORRECT ANSWER-The total cost of insurance, derived by
multiplying the rate of insurance by the amount of insurance.
